Economics of Education

Topic 1: Performance Pay for Teachers Background


In recent years, some school districts (e.g., Nashville in Tennessee) have passed measures designed to reward teachers for high levels of performance. These “pay for performance” plans are sometimes called “merit pay” or “bonus pay” plans. Education Secretary Arne Duncan is a strong supporter of these plans.



Consider a district other than Nashville that is implemented one of these plans recently. Based on your investigation of the issues involved in implementing the plan, do you think that performance pay for teachers is likely to improve student outcomes?



First, summarize the relevant background information. What were the arguments leading up to the plan? Who was for and against the plan? What exactly does the plan involve? Second, assess the extent to which you think the plan will incentivize teachers. At this point you need to be creative: think about the terms of the plan (e.g., the relative size of the reward) and the likely pressures that teachers face (e.g., from other teachers, parents). Try to get information on whether teachers felt like the plan gave them strong incentives. An obvious source here is the local teachers union: they probably have the best information on these plans and, in my experience, these people are generally helpful and knowledgeable (if not impartial). Third, go beyond the particular plan that you study to think about the extent to which the issues that you have discussed will be relevant to other pay plans or whether certain problems could have been avoided had the plan been designed differently.

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